Tuesday, 9 May 2023

Mortgage Interest Rates

Questions (57)

Peadar Tóibín

Question:

57. Deputy Peadar Tóibín asked the Minister for Finance if his attention has been drawn to mortgage interest rate increases (details supplied); and if he will make a statement on the matter. [21447/23]

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Written answers

Minister for Finance

The formulation and implementation of monetary policy is an independent matter for the European Central Bank (ECB). As the Deputy is aware, the ECB has increased official interest rates over recent months as it attempts to combat inflation. The level of official interest rates will influence the overall level of interest rates throughout the economy. However, the setting of retail lending rates by individual lenders is a commercial matter for that lender and I have no function or role in such decision making matters by financial institutions. In line with the changing interest rate environment and other relevant factors, individual lenders are considering and adjusting their new lending rates. Nevertheless, it is worth noting that, on an overall level, the increase in weighted average interest rate on new Irish mortgage agreements has not been as large as it has been in some other countries. At end-February 2023 the average rate on new mortgages was 2.92% and it is now among the lowest in the euro area.

Also it should be noted that the structure of the Irish mortgage market is changing and that there is an increase in the take up of fixed rate mortgages - in February 2023 for example 93% of new mortgages were at a fixed interest rate - and this protects borrowers from interest rate changes for the period that the interest rate is fixed. Also, as regulator, the Central Bank has introduced a number of increased protections for variable rate mortgage holders in recent years which help mortgage holders identify lower cost mortgage options. Firstly it made changes to the Consumer Protection Code which required lenders to explain to borrowers how their non tracker variable interest rates have been set and to clearly identify the factors which may result in changes to variable interest rates. Secondly, it also increases the level of information lenders are required to provide their customers including where there is a possibility for the borrower to move to a lower ‘loan to value’ interest rate band and signpost the borrower to the Competition and Consumer Protection Commission's mortgage switching tool. However, it is the case that some borrowers will experience repayment difficulty on a mortgage secured on a primary residence and the Code of Conduct on Mortgage Arrears (CCMA) was introduced to ensure that regulated entities have fair and transparent processes in place for dealing with such cases.

The CCMA sets out the process that entities must follow when a borrower is in or facing difficulties with their mortgage payments and it states that all arrears cases must be handled sympathetically and positively by the regulated entity, with the objective at all times of assisting the borrower to meet his or her mortgage obligations. There is an obligation on regulated entities to explore all of the options for alternative repayment arrangements (ARAs) offered by that entity, in order to determine which ARA, if any, is appropriate and sustainable for the borrower’s individual circumstances.

I would encourage borrowers to engage with their lender to discuss any difficulty that may be arising in relation to a mortgage. Early and on-going engagement has been shown to yield positive results for both borrowers and lenders in addressing a repayment difficulty.

Questions Nos. 58 to 61, inclusive, answered orally.

Insurance Coverage

Questions (62)

Holly Cairns

Question:

62. Deputy Holly Cairns asked the Minister for Finance the steps he is taking to assist sporting organisations that cannot access insurance cover at a reasonable cost. [21232/23]

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Written answers

Minister for Finance

I wish to acknowledge the issue raised by the Deputy regarding the difficulties experienced by some sporting organisations in obtaining insurance. As the Deputy will be aware, neither I, the Minister for Finance, nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products, as per the EU Solvency II Directive insurance framework. As such, the Government faces constraints in seeking to address this matter.

Nonetheless, the Government continues to prioritise insurance reform via the Action Plan for Insurance Reform. The third Action Plan Implementation Report demonstrates that considerable progress has been achieved, with the vast bulk – approximately 90 per cent – of the 66 actions contained therein now delivered or ongoing. Rebalancing the Duty of Care legislation (the Occupiers’ Liability Act 1995) is now a key remaining priority and is being led by the Minister of Justice. Overhauling this legislation which targets the issue of ‘slip, trips and falls’ should help to address some issues experienced by sporting organisations. This in turn could potentially unlock further liability insurance capacity for this and other sectors. Furthermore, the new Personal Injuries Guidelines and legislation to help reform the Personal Injuries Assessment Board are now both in place, with the ultimate aim of stabilising the cost of claims, to ensure they become more predictable.

I recently met with the CEOs of all the major insurers operating in the domestic Irish market and outlined Governments expectation that arising from the implementation of the reform programme they will pass on the savings and broaden their risk appetite, including to sporting and community-based groups. Furthermore, the Government’s Office to Promote Competition in the Insurance Market – which I chair – continues to work to help increase capacity in the Irish market, including by communicating the achievements of the Action Plan. This work has started to bear fruit with some new firms announcing their entry to the market in recent months. Capacity in the activity and sporting sectors is a focus of the Office, which is due to next meet Fáilte Ireland and receive an update on insurance issues and developments within this area.

Accordingly, building on this progress by encouraging both new and existing insurers to expand into new areas, including sport, and increasing affordability as a result remains one of our goals.

Question No. 63 answered with Question No. 59.

Interest Rates

Questions (64)

Ged Nash

Question:

64. Deputy Ged Nash asked the Minister for Finance if he formally enunciated his concerns at the ECB's policy of continuing to increase interest rates and the impact of this policy on households and businesses at the recent meeting of finance ministers and ECB officials in Stockholm in late April 2023; if this is the official position of the Government; and if he will make a statement on the matter. [21441/23]

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Written answers

Minister for Finance

Given the broad-based nature of inflationary pressures last year, central banks have, by necessity, rapidly tightened monetary policy. Price stability is a cornerstone of macroeconomic stability. With the further ¼ point rate rise announced last Thursday, the ECB has now increased interest rates by 3¾ percentage points since July.

Although necessary to avoid inflationary pressures becoming entrenched, the sudden rise in interest rates has increased the cost of capital and debt service costs for both households and businesses. This has made it more costly for households and businesses to borrow and invest. In addition, the rising cost of borrowing also applies to the Government.

At end-April 2023, I attended the Informal Meeting of Economic and Finance Ministers, hosted by the Swedish Presidency. Among the items for discussion was one that focused on national experiences with managing the challenges in addressing rising costs for households and businesses. Rising costs are something that are on the minds of ministers right across Europe and we considered appropriate fiscal policy measures and what can be done beyond budgetary supports for households and businesses, while seeking to ensure fiscal actions do not worsen existing and emerging inflationary pressures.

As Minister for Finance, monetary policy is not a part of my remit and, in the euro area, is the responsibility of the Governing Council of the ECB.

Instead, Government has focussed on providing timely and targeted fiscal supports to households and businesses most in need to support them through the period of high inflation. To date, a total of €12 billion has now been provided in direct relief to absorb some of the impact and ease the burden of inflation on households and businesses.

I am encouraged that inflation appears to have passed its peak and is on a downward trajectory. Indeed we have seen a near 2 percentage point fall in the inflation rate since February. As set out in the Stability Programme Update in April, my Department expects inflation to continue to ease over the course of the year, averaging 4.9 per cent for the year as a whole. For next year headline inflation is expected to moderate further to 2.5 per cent.

Business Supports

Questions (65)

Cathal Crowe

Question:

65. Deputy Cathal Crowe asked the Minister for Finance the number of businesses in counties Clare, Limerick and Tipperary, respectively, that have applied for assistance under the temporary business energy support scheme to date; the number that have been successful in each county; the estimated value or worth of the support to date for businesses in each county; and if he will make a statement on the matter. [21468/23]

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Written answers

Minister for Finance

The Temporary Business Energy Support Scheme (TBESS) was introduced to support qualifying businesses with increases in their electricity or natural gas costs arising from the invasion of Ukraine by Russia.

Sections 100 to 102 of the Finance Act 2022 make provision for the TBESS. The scheme provides support to qualifying businesses in respect of energy costs relating to the period from 1 September 2022 to 30 April 2023. The TBESS is available to eligible tax compliant businesses carrying on a trade or profession, the profits of which are chargeable to tax under Case I or Case II of Schedule D.

For claim periods falling between September 2022 and February 2023, qualifying businesses can claim for 40% of the increases in their energy bills when compared to their bills for the reference period which is the corresponding calendar month in the previous year. As part of enhancements to the scheme which are provided for in Finance Bill 2023 the level of relief increases from 40% of the uplift in energy cost to 50% from 1 March 2023, subject to the relevant monthly caps contained in the legislation. In addition Finance Bill 2023 reduces the entry threshold for the scheme from a 50% increase in average unit price to a 30% increase. The scheme will also be extended to 31 May 2023.

Businesses which are eligible for TBESS can register for the scheme via Revenue’s online service and comprehensive guidelines on the operation of the scheme are available on the Revenue website.

I am advised by Revenue of the following registrations and claims for the Clare, Limerick and Tipperary, as of 4 May 2023:

County	Registration Applications	Registrations Approved	Approved Claims	Value of Approved Claims	Value of Paid Claims
				€m	€m
Clare	768	760	945	1.93	1.75
Limerick	1,256	1,233	1,645	3.37	3.14
Tipperary	1,187	1,166	1,478	2.31	2.04

I am advised by Revenue that as of 4 May, 28,495 businesses have registered for the scheme in total nationally. 23,852 of these have commenced the claim process. 18,217 businesses have fully completed the claims process and 5,635 have partially completed the claims process. Until the claims process is fully complete, the claim cannot be processed by Revenue, and for approved claims, a payment made. To date, the vast majority of completed claims have been approved by Revenue.

Applications received from businesses are reviewed to determine eligibility and this accounts for the variance in the figures for ‘all applications’ and ‘approved registrations’. In addition, Revenue is publishing detailed statistical reports in relation to the TBESS which are updated on a weekly basis. These reports are available on Revenue’s website.

Question No. 66 answered orally.

Question No. 67 answered with Question No. 59.

Questions Nos. 68 and 69 answered orally.

Primary Medical Certificates

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Written answers

Minister for Finance

I propose to take Questions Nos. 70, 95, 114 and 219 together.

The Disabled Drivers and Disabled Passengers Scheme provides relief from Vehicle Registration Tax and VAT on an adapted car, as well as an exemption from motor tax and an annual fuel grant.

The Scheme is open to severely and permanently disabled persons as a driver or as a passenger and also to certain charitable organisations. In order to qualify for relief, the applicant must hold a Primary Medical Certificate issued by the relevant Senior Area Medical Officer or a Board Medical Certificate issued by the Disabled Driver Medical Board of Appeal. To qualify for a Primary Medical Certificate an applicant must be permanently and severely disabled, and satisfy at least one of the six medical criteria, as set out in the Finance Act 2020.

In the event that a Primary Medical Certificate is not granted by the relevant Senior Area Medical Officer an appeal may be made to the independent Disabled Drivers Medical Board of Appeal.

At an appeal hearing the Board reviews the decision by a HSE Primary/Senior Area Medical Officer and determines if an appellant does, or does not meet, one of the six medical criteria. Only if an appellant meets one of the six eligibility criteria will the Board issue a Board Medical Certificate.

I have no role in relation to the granting or refusal of Primary Medical Certificates and the HSE and the Disabled Drivers Medical Board of Appeal must be independent in their clinical determinations.

As the Deputy is probably aware the previous Disabled Drivers Medical Board of Appeal members resigned in November 2021. The reappointment process has proved to be a very challenging and slow process due to the small number of applications received. In order to fill the five positions, there were three Expressions of Interest Campaigns in 2022 which the Department of Health led on. The process was completed in January 2023 with the completion of Garda vetting for the final two candidates.

However the process has been further complicated by the National Rehabilitation Hospital deciding in February 2023 to withdraw their services with immediate effect, though they have agreed to continue registering appeal applications for the moment. Finance and Health officials are actively seeking to implement new arrangements, including engaging with the National Rehabilitation Hospital. As there are a range of requirements and complex issues involved this may take some time.

In addition in March 2023, one nominated member of the Disabled Drivers Medical Board of Appeal resigned for personal reasons. The Department of Health with support from Department of Finance officials launched another Expression of Interest Campaign on 3 April 2023 with a closing date of 28 April 2023. An interview for this position is expected to take place next week.

Requests for appeal hearings can still be sent to the Disabled Drivers Medical Board of Appeal secretary based in the National Rehabilitation Hospital.

Assessments for the Primary Medical Certificate, by the HSE, are continuing to take place. In this regard, an important point to make is that even though there has been no appeal mechanism since the previous Board resigned, applicants who have been deemed not to have met one of the six eligibility criteria required for a Primary Medical Certificate are entitled to request another such assessment six months after an unsuccessful Primary Medical Certificate assessment.

Finally as of 24 April 2023 there are 1,007 appeals outstanding.

Budget Targets

Questions (71)

James O'Connor

Question:

71. Deputy James O'Connor asked the Minister for Finance if he will provide this Deputy an update on the expected budget surplus in 2023 to 2024; and if he will make a statement on the matter. [21547/23]

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Written answers

Minister for Finance

Economic and budgetary forecasts covering the period 2023-2026 were set out in the Stability Programme Update which was published and submitted to the European Commission and Council last month.

For this year, my Department is forecasting a general government surplus of €10 billion, the equivalent of 3½ per cent of modified gross national income.

For next year, the general government surplus is expected to increase to €16.2 billion, 5.4 per cent of modified gross national income.

The headline surpluses in prospect for this year and next are largely the result of ‘windfall’ corporate tax receipts, in other words receipts that cannot be explained by underlying economic conditions. These windfall receipts are highly concentrated among a small number of multinational firms, and cannot be relied upon to continue indefinitely.

Windfalls are estimated at almost €12 billion this year, meaning an underlying deficit of €1.8 billion for this year. This is a better metric for assessing the resilience of our public finances.

The Government has repeatedly warned that it would be inappropriate to build up permanent fiscal commitments on the basis of transitory, windfall revenues. Accordingly it is my intention to establish a longer-term savings fund, capitalised by these windfall receipts. The fund will be used inter alia to partly finance the budgetary costs associated with an ageing population.

Tax Code

Questions (72)

Alan Dillon

Question:

72. Deputy Alan Dillon asked the Minister for Finance if he intends to review the rezoned land tax to ensure a fairer approach to land management in view of landowners being asked to review supplemental maps published; and if he will make a statement on the matter. [21429/23]

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Written answers

Minister for Finance

As set out in Housing Policy Objective 15.2 of Housing for All, a new residential zoned land tax to activate vacant land for residential purposes, and to replace the Vacant Site Levy, was enacted in Finance Act 2021.

The tax measure will be levied at 3% of the land's market value, as indicated on maps to be prepared and published by local authorities. Certain exclusions apply.

Local authorities published draft zoned land maps by 1 November 2022 and landowners had until 1 January 2023 to make submissions seeking an exclusion. Local authorities published supplemental maps by 1 May 2023 and submissions to local authorities can now be made by landowners up to 1 June 2023.

The implementation dates provided for a two-year lead in time to facilitate a balanced approach between the urgent need to increase housing supply and the need to allow landowners make submissions to local authorities and appeals to An Bord Pleanála.

It is acknowledged that the tax will impact on landowners including, as outlined by the Deputy, in relation to supplemental maps. However, the land in question is zoned for a particular purpose under a plan adopted by the relevant local authority. The land has also been subject to investment by the State in the services necessary to enable development to address the urgent need to increase housing supply and therefore should be managed in such a way that it is used for housing.

While I have no plans to review the provisions relating to supplemental maps, I will monitor the effectiveness of the residential zoned land tax up to and beyond its implementation in 2024.

Business Supports

Questions (73)

Colm Burke

Question:

73. Deputy Colm Burke asked the Minister for Finance the total number of farmers who have availed of TBESS to date; the total number in Cork, in tabular form; and if he will make a statement on the matter. [21525/23]

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Written answers

Minister for Finance

The Temporary Business Energy Support Scheme (TBESS) was introduced to support qualifying businesses with increases in their electricity or natural gas costs arising from the invasion of Ukraine by Russia.

Sections 100 to 102 of the Finance Act 2022 make provision for the TBESS. The scheme provides support to qualifying businesses in respect of energy costs relating to the period from 1 September 2022 to 30 April 2023. The TBESS is available to eligible tax compliant businesses carrying on a trade or profession, the profits of which are chargeable to tax under Case I or Case II of Schedule D.

For claim periods falling between September 2022 and February 2023, qualifying businesses can claim for 40% of the increases in their energy bills when compared to their bills for the reference period which is the corresponding calendar month in the previous year. As part of enhancements to the scheme that are provided for in Finance Bill 2023 the level of relief increases from 40% of the uplift in energy cost to 50% from 1 March 2023, subject to the relevant monthly caps contained in the legislation. In addition Finance Bill 2023 reduces the entry threshold for the scheme from a 50% increase in average unit price to a 30% increase. The scheme will also be extended to 31 May 2023.

Businesses which are eligible for TBESS can register for the scheme via Revenue’s online service and comprehensive guidelines on the operation of the scheme are available on the Revenue website.

With regard to the farming sector, I am advised by Revenue that nationally, as of 4 May 2023, there have been 2,222 registrations and 1,870 claims associated with that sector. The breakdown of this figure by county is not currently available. With regard to the amounts paid to farmers, the specific figure is not available but is contained within the broader data for the Agriculture, Forestry and Fishing sector which, as of 4 May was as follows:

Sector of Business	Registration	Approved Claims	Value of Approved Claims	Value of Paid Claims
			€ million	€ million
Agriculture, Forestry & Fishing	2,262	1,891	2.6	2.5

I am advised by Revenue of the following registrations and claims for all sectors in County Cork, as of 4 May 2023:

County	Registration Applications	Registrations Approved	Approved Claims	Value of Approved Claims	Value of Paid Claims
				€ million	€ million
Cork	3,664	3,620	4,870	9.39	8.79

As of 4 May, 28,495 businesses have registered for the scheme in total nationally. 23,852 of these have commenced the claim process. 18,217 businesses have fully completed the claims process and 5,635 have partially completed the claims process. Until the claims process is fully complete, the claim cannot be processed by Revenue, and for approved claims, a payment made. To date, the vast majority of completed claims have been approved by Revenue.

Applications received from businesses are reviewed to determine eligibility and this accounts for the variance in the figures for ‘all applications’ and ‘approved registrations’. In addition, Revenue is publishing detailed statistical reports in relation to the TBESS which are updated on a weekly basis. These reports are available on Revenue’s website.

Tax Reliefs

Questions (74)

Emer Higgins

Question:

74. Deputy Emer Higgins asked the Minister for Finance his views on further tax breaks that could potentially be offered to landlords to keep them in the rental market. [11844/23]

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Written answers

Minister for Finance

The exiting of small or accidental landlords from the private rental sector is a consequence of multiple factors, for example, the changing regulatory environment and the recent rise in house prices.

It is important to note that a wide array of tax reliefs and exemptions are already available for landlords and the property sector. The combined cost of these, in tax receipts forgone, is significant.

For landlords subject to income tax, the current position is that, after the deduction of allowable expenses, rental income is subject to tax as part of the total taxable income of the landlord. Individual landlords may therefore be subject to income tax at their marginal rate of tax in addition to which USC and PRSI will also apply. However, the Rent-a-Room relief allows a tax disregard for up to €14,000 rental income for an individual renting out a room or rooms in their own principal private residence.

Some examples of deductible expenses currently available to landlords include:

• the cost of maintenance, repairs, insurance and management of the property; property management fees;

• the cost of registering a residential tenancy with the Residential Tenancies Board; the cost of letting, such as letting agency fees; and the cost to the landlord of any goods provided or services rendered to a tenant;

• with effect from 1 January 2019, 100% of the interest on mortgages for residential rental properties may also be deducted;

• wear and tear allowances are available in respect of furniture, fixtures and fittings provided by a landlord. These allowances are granted at the rate of 12.5% per annum over a period of 8 years;

• owners of rental properties are also entitled to claim deductions of up to €10,000 against rental income from that premises for various expenses incurred prior to it being first let after a six-month period of non-occupancy; and

• Finance Act 2022 provided for the deduction of up to €10,000 in certain retrofitting expenses incurred by landlords on rented residential properties where tenants remain in situ.

I understand that the Department of Housing, Local Government and Heritage has commenced a review of the private rental sector, and that this review will take into account the significant regulatory changes over the past several years and will ensure that our housing system provides an efficient, affordable, safe and secure framework for both landlords and tenants. I also understand that it will include a thematic review of the principal and relevant elements of the rental market, to ensure that Ireland has a sector which meets the needs of tenants, both short-term and long-term, while providing a supportive environment for the maintenance of the existing stock and provision of new units.

I will make decisions regarding tax incentives and reliefs in the context of the annual Budget and Finance Bill process. Such decisions must have regard to the sound management of the public finances and my Department's Tax Expenditure Guidelines. While the use of tax measures to retain landlords in the rental market or increase supply may be well-intentioned, Ireland’s history shows that the issue of property-based tax expenditures should be approached with caution. It is therefore important that any proposals regarding further new reliefs are carefully thought out to ensure that they are targeted and have the intended effect.

My Department continues to monitor all aspects of the property market and I will continue to work with my colleagues in Government to ensure that any further interventions in the housing market are appropriately calibrated, represent the best use of scarce public resources and boost the supply of housing in both the public and private sectors.

Tax Collection

Questions (75)

Ged Nash

Question:

75. Deputy Ged Nash asked the Minister for Finance if he is concerned that just €73 million of the more than €2.2 billion in warehoused tax debt under the relevant Covid scheme, which is owed by companies, has been paid as of March 2023; the steps he plans to take to address this issue, which now involves approximately 64,000 firms; and if he will make a statement on the matter. [21439/23]

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Written answers

Minister for Finance

The Debt Warehousing scheme allows for the deferral of the payment of VAT, PAYE (Employer) and certain self-assessed income tax liabilities, including TWSS and EWSS overpayments. It provided a vital liquidity support to businesses during the Covid pandemic and continues to support businesses as they recover from the impacts of the pandemic and the current energy crisis.

At the end of March 2023, the value of debt warehoused was €2.216 billion for 63,600 businesses. Of this total, 19,758 (31%) have warehoused debts of less than €100; 9,767 (15%) have warehoused debts between €101 and €1,000; and a further 11,769 (19%) have warehoused debts between €1,001 and €5,000. In total 41,294 businesses in the warehouse (65% of the total) have an outstanding balance of less than €5,000.

The bulk of the debt figure is warehoused by just 6,462 customers, with outstanding balances greater than €50,000, totalling €1.897 billion.

In October 2022, Revenue announced an extension to the period during which debts can remain “parked” in the warehouse. This means that businesses do not have the challenge of making arrangements to repay their warehoused debt until 1 May 2024. This significant additional time should greatly support businesses in their recovery from the impacts of the pandemic and the energy crisis and prevent business failure. Importantly also, businesses are still able to avail of the reduced 3% interest rate from 1 January 2023, as opposed to the general interest rate of 10% when they come to pay the debt.

It is not unexpected that only a small amount of warehoused debt has been paid to date as there is no obligation on businesses to commence repaying their warehoused debt until 1 May 2024, however to reduce their interest bill, some businesses have already begun to repay their warehoused debt where their financial circumstances permit. To end March 2023, just over 2,000 customers have agreed formal payment arrangements with Revenue for warehoused debt of €73 million, and a further 2,100 customers have paid almost €11 million towards their warehoused debt since January 2023. Revenue’s expectation is that this trend will continue to increase for the remainder of the year as businesses proactively make plans to address the payment of their warehoused debt and reduce their interest costs.

With regard to the repayment of warehoused debt from 1 May 2024, Revenue’s approach to collecting the tax debt remaining in the warehouse at that time will be flexible and tailored to each business based on its capacity to pay. In advance of the repayment date, Revenue will engage with those businesses yet to agree a payment plan, to discuss their payment options and, where required, agree a tailored phased payment arrangement in respect of the ‘parked’ liability, over an agreed timeframe.

Revenue has a proven track record in agreeing flexible payment arrangements that take account of the financial circumstances of each business and their capacity to pay. These flexibilities can include a reduced down payment amount to commence the payment arrangement, an extended payment duration of up to 5 years and the availability of payment breaks and payment deferral when temporary cash flow difficulties arise during the arrangement term.

Revenue’s expectation is that the extended timeline to 1 May 2024 for entering into arrangements for repaying warehoused debt, together with flexible payment arrangements will assist most businesses to work through any payment difficulties and will satisfactorily address the repayment of their warehoused tax debt over an acceptable period of time.

Businesses are reminded that it remains a key condition of the Debt Warehousing Scheme that current liabilities are filed and paid on time. Revenue is actively engaging with businesses in the scheme to ensure they are complying with this key condition in order to retain the benefits of the scheme. Where payment difficulties arise, particularly in relation to current tax obligations, I am assured that Revenue will work proactively with businesses who engage early to resolve these payment difficulties.

Universal Social Charge

Questions (76)

Brendan Griffin

Question:

76. Deputy Brendan Griffin asked the Minister for Finance if he will review the rates and bands relating to the application of USC to workers' incomes with a view to reducing the taxation burden on workers in the context of rapidly rising living costs; and if he will make a statement on the matter. [21467/23]

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Written answers

Minister for Finance

The Universal Social Charge (USC) was designed and incorporated into the Irish taxation system in 2011 to replace two other charges, namely the Health and Income Levies. The primary purpose of the USC was to widen the tax base and to provide a steady income to the Exchequer to provide funding for public services.

The Programme for Government (PfG), “Our Shared Future”, contains a number of specific commitments relating to personal taxation. These include the commitment that, "from Budget 2022 onwards, in the event that incomes are again rising as the economy recovers, credits and bands will be index linked to earnings. This will be done to prevent an increase in the real burden of income tax, to prevent more low income workers being taken into the tax net because of no changes to the tax system and to ensure there is no increase in the number of people having to pay higher income tax and USC rates.” In addition, the PfG states that “the Earned Income Tax Credit will be equalised with the employee tax credit”. It also includes a commitment to increase the Home Carer Tax Credit to support stay-at-home parents and those with caring responsibilities.

Significant progress has been made in achieving these commitments. For example, over the last two Budgets the Government increased the Standard Rate Cut-Off Point for single persons by 13.3 per cent from €35,300 to €40,000, with commensurate increases for persons who are married/in civil partnerships. In addition, the main tax credits - personal tax credits, employee tax credit and earned income credit - were increased by around 7.6 per cent or €125 each from €1,650 to €1,775. It is also worth pointing out that the earned income tax credit was equalised with the employee tax credit in 2021. The Home Carer Tax Credit was also increased by €100 from €1,600 to €1,700 (a 6.3 per cent increase) in Budget 2023.

The last two Budgets have also seen the ceiling for the 2 per cent rate of USC increase by €2,233 from €20,687 to €22,920 in line with the increases in the National Minimum Wage (which, over that period, increased from €10.20 to €11.30 per hour). This ensured that a full time worker on the national minimum wage stayed outside the higher rates of USC.

Furthermore, this Government is acutely aware of the cost of living crisis and, so far, have announced or implemented approximately €12 billion worth of direct measures in relation to the cost of living.

As the Deputy will appreciate it is a longstanding practice of the Minister for Finance not to comment in advance of the Budget on any tax matters that might be the subject of Budget decisions.

Insurance Industry

Questions (77)

Holly Cairns

Question:

77. Deputy Holly Cairns asked the Minister for Finance the steps he is taking to addresses high insurance premiums for SMEs. [21233/23]

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Written answers

Minister for Finance

As the Deputy will appreciate, neither I, nor the Central Bank of Ireland, can direct the pricing or provision of insurance products, as this is a commercial matter which individual companies assess on a case-by-case basis. This position is reinforced by the EU Single Market framework for insurance (the Solvency II Directive).

Nevertheless, this Government is continuing to prioritise insurance reform through the whole-of-Government Action Plan for Insurance Reform, which aims to improve the cost of insurance for all groups, including SMEs. The latest implementation report, published in November 2022, indicates that significant progress has been achieved, with the vast majority of actions now completed, and the remainder ongoing.

Key reforms include the introduction of the Personal Injuries Guidelines, with data from the Personal Injuries Assessment Board (PIAB) indicating that the overall average award has fallen by 38 per cent compared to awards made in 2020 under the Book of Quantum. Another key, complementary action is the Personal Injuries Resolution Board Act 2022, which aims to increase the number of personal injury claims settled through the PIAB, thereby reducing the expense and time associated with personal injuries litigation.

Further actions aimed at lowering costs include measures to reduce fraud, and legislation placing perjury on a statutory footing for the first time. Given the extent of this reform, and the wide range of measures being implemented, it is necessary for the insurance industry to pass on benefits to its hard-pressed customers.

According to the second NCID Report on Employers’ Liability (EL), Public Liability (PL) and Commercial Property Insurance, published in June 2022, 57 per cent of package policies were for a premium of less than €1,000, and 92 per cent of policies had a premium of less than €5,000. Only 2 per cent had premiums over €25,000. This would appear to indicate that for the vast majority, insurance premiums seem broadly within a range with what one might expect for the size and distribution of businesses.

Notwithstanding this, I acknowledge that difficulties remain for some SMEs. Upcoming legislation to rebalance the “common duty of care” via amendments to the Occupiers’ Liability Act 1995, is of particular relevance for this sector. These amendments, which are in line with the Government policy objective of restricting the liability of occupiers, are being brought forward via the Courts and Civil Law (Miscellaneous Provisions) Bill 2022.

This legislation is the responsibility of the Minister for Justice, and is currently being considered by the Seanad third stage. It is my hope that it can be completed as soon as possible, as it should help to reduce frivolous claims proceeding to litigation. In time, cost savings from reduced claims should also help to lower premiums for businesses, particularly those engaged in high-risk/high-footfall areas, where claims associated with ‘slips, trips and falls’ are more prevalent.

For my part, I remain committed to working with colleagues to complete outstanding reforms, and monitoring their impact through future NCID reports, with a view to ensuring that the Government’s Action Plan can lead to improvements in both the price and availability of cover for businesses, including SMEs.

Inflation Rate

Questions (78)

Seán Haughey

Question:

78. Deputy Seán Haughey asked the Minister for Finance his Department's forecast for headline inflation in 2023 and for 2024; and if he will make a statement on the matter. [21478/23]

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Written answers

Minister for Finance

Almost all advanced economies have faced multi-decade high rates of inflation over the past year and Ireland is no exception. Consumer price (HICP) inflation averaged just over 8 per cent last year, compared to around ½ per cent in the preceding decade.

The easing of wholesale energy markets over the last number of months suggests that inflation has passed its peak and is on a downward trajectory. While inflation remained elevated at 6.3 per cent in April, it has eased back significantly from the peak of 9.6 per cent reached last summer.

My Department published updated inflation projections as part of the Stability Programme Update (SPU) in April. Inflation is expected to continue to ease over the course of the year, primarily as a result of energy prices, and is projected to average 4.9 per cent for the year as a whole. For next year headline inflation is expected to moderate further to 2.5 per cent. Despite the easing in the rate of inflation, the price level consumers face will remain elevated.

Despite this, the inflation outlook remains highly uncertain at present and the risks to the Department’s baseline inflation projections are two-sided in nature. To reflect these risks the Department published two alternative scenarios as part of the SPU.

Under the downside - or lower inflation - scenario, the recent easing in wholesale energy prices are assumed to be passed-through to retail gas and electricity prices more quickly than expected. Inflation in this scenario would average 4.4 per cent this year and 1.6 per cent next year.

Under the upside – or higher inflation - scenario, inflation could prove more persistent reflecting higher-than-assumed movements in the wholesale energy markets and greater wage pressures given the tight labour market conditions. Under this upside scenario in this scenario would average 5.8 per cent this year and 3.3 per cent next year.

Tax Code

Questions (79)

Ruairí Ó Murchú

Question:

79. Deputy Ruairí Ó Murchú asked the Minister for Finance if he will provide an update on the work being carried out in his Department to fix the anomaly whereby many workers who live in the North and who work in the South are precluded from working from home due to the significant Revenue implications for their employers; if he will detail any contacts his Department has had on the matter with the equivalent British department in the last six months; and if he will make a statement on the matter. [21476/23]

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Written answers

Minister for Finance

Under our domestic tax rules, an individual who holds a private sector employment in the State is chargeable to tax in the State in full on the emoluments of the employment and such income is also within the scope of the PAYE system of payroll deductions at source. This treatment applies to individuals who are resident in the State for tax purposes and also to individuals who are not resident in the State for tax purposes, but who work here full-time.

It is important to clarify that workers who reside in Northern Ireland and work in the State are not precluded from working from home. The availability of remote working is primarily a matter between the employer and the employee. An Irish private sector employer may allow an employee to work remotely in Northern Ireland, however, such arrangements may result in implications for the employer from a UK tax perspective. Therefore, the potential implications that may arise from such arrangements are outside the scope of my direct remit and that of my Department.

More generally, the issue of cross border workers and the availability of remote working options has potential tax implications not only for this country but also on an international level, given the increase in the extent of remote working as a result of the Covid-19 pandemic. It is a very complex matter and the State cannot move unilaterally. Discussions in relation to global mobility and the tax policy implications for cross border workers have already started at both the EU and the OECD. My Department is fully engaging with all the relevant stakeholders and is contributing to the policy discussions on the issue.

The following three issues are actively being pursued:

1. Obtain Better Data – there is a general acceptance that data in relation to the nature and extent of cross-border working could be improved. The ESRI has been commissioned to undertake a research project in this area. It is understood that this work is in progress by the ESRI.

2. Minimise Administrative Burden – Revenue are currently looking at ways to minimise and simplify the administrative burden insofar as possible.

3. International Discussions – the Department of Finance is actively engaging in any international discussions on the policy implications of cross-border working. The Department will also engage bilaterally with other jurisdictions as appropriate to the circumstances.

In this regard, to answer the Deputy’s specific question in relation to any contacts between my Department and their counterparts in the UK, in the last six months officials from my Department had one meeting to facilitate an exchange of information on the issue of cross-border working with representatives of HM Treasury.

Financial Services

Questions (80)

Pearse Doherty

Question:

80. Deputy Pearse Doherty asked the Minister for Finance the actions he and is Department are considering to promote switching for performing loans held by retail credit firms and credit servicing firms; and if he will make a statement on the matter. [21539/23]

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Written answers

Minister for Finance

Research has indicated that there is potential for existing mortgage holders to make mortgage savings by switching their mortgage. This is a particularly important consideration at a time of rising interest rates.

I have met with the CEOs of the retail banks and a number of non-bank lenders where I emphasised that they should take a consumer focused approach to encourage switching where possible. I have also asked the Banking and Payments Federation to develop a campaign to ensure consumers are aware of the supports available.

On behalf of my Department, the Economic and Social Research Institute (ESRI) is currently carrying out work which will inform the development of tools to promote switching. However the ESRI’s work also serves to highlight consumer inertia as a critical issue which deserves further attention.

The Competition and Consumer Protection Commission (CCPC) and Money Advice and Budgeting Service (MABS) also play an important role in informing consumers about the options available to them. It is a priority for me to ensure that the regulatory framework supports borrowers in the mortgage switching process. In the context of the review of the Consumer Protection Code, I have indicated that the Central Bank should review the existing regulatory provisions and consider whether more dedicated mortgage switching resources, such as a standalone mortgage switching code, could better encourage and facilitate switching in the mortgage market.

In that context and the rise in the cost of living more generally, the Central Bank wrote to all regulated firms last November to set out its expectations on how regulated firms should support their customers.

With respect to mortgages, the Central Bank is especially focused on ensuring that firms have the resources and arrangements in place to assess applications from existing and new or switching borrowers in a manner that is timely and based on prudent lending standards applied consistently across all applicants.

The Central Bank is also scrutinizing the switching and lending activity of the retail banks to ensure there is no discrimination based on who a borrower's current creditor is and it has confirmed that the work identified no evidence to date of such discrimination.

Insurance Industry

Questions (81)

Pearse Doherty

Question:

81. Deputy Pearse Doherty asked the Minister for Finance his views on the recently published Private Motor Mid-Year Report of the National Claims Information Database; if he will consider measures to ensure that recent reforms in the insurance market are passed on to consumers in the form of reduced insurance prices; and if he will make a statement on the matter. [21541/23]

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Written answers

Minister for Finance

I welcome this first mid-year report of the National Claims Information Database (NCID) on private motor insurance, which contains a number of positive messages. At the outset, against the backdrop of high inflation, the report indicates that the average cost of a motor premium declined by a further 5 per cent in the first 6 months of 2022, to €578. On a quarterly basis, average earned premiums have now reduced by 19 per cent since their peak in Q4 2017. I welcome this downward trend, and believe it indicates that the Government’s targeted reforms are having a positive impact for motorists.

NCID data show that the Personal Injuries Assessment Board (PIAB) is the most cost effective route for settling claims. For the majority of claims (total settled cost of less than €100k), the average compensation award amount was similar for the PIAB and litigated claims; however, legal costs for litigated claims were over 20 times higher.

These legal expenses adversely impact the overall cost of claims, which is acknowledged to be the main driver of the cost of insurance. The clear message from the report is therefore that it is in everyone’s interest that more claimants settle at the PIAB stage. This is why the Government prioritised the Personal Injuries Resolution Board Act 2022, which is being commenced in stages, and aims to increase the number of cases being settled by the Board and without recourse to costlier litigation.

Following the enhancement of the NCID, this is now the second report to contain data on the Personal Injuries Guidelines. It shows that for claims settled under the Guidelines either directly or through the PIAB in the first 6 months of 2022, the average cost was between 34 and 47 per cent lower than claims settled in 2020 under the Book of Quantum. I welcome this significant reduction in costs, and believe it is further evidence that the Guidelines are working.

It is important to recognise that it will be some time before we see the full impact of the Guidelines on litigated claims, which account for the majority of total injury claims costs. Notwithstanding this, I believe these early findings are positive, and that it is incumbent on insurers to ensure that the savings being generated by the Guidelines, as well as the Government’s many other reforms, are being reflected in premiums.

In conclusion, the NCID has proven to be a key source of verified data on the insurance market, and a vital tool for policymakers. The addition of more frequent reporting, through these mid-year publications, will enable Government to continue monitoring developments in the market, and to assess the impact of our reform package in a timely manner, in order to ensure that reforms are delivering, and hold industry to account.

Fiscal Policy

Questions (82, 101, 116)

Seán Haughey

Question:

82. Deputy Seán Haughey asked the Minister for Finance the steps he is taking to address the risks around windfall corporate taxes; and if he will make a statement on the matter. [21477/23]

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Pádraig O'Sullivan

Question:

101. Deputy Pádraig O'Sullivan asked the Minister for Finance if he will outline his plans for the surplus of €16 billion estimated for 2024; and if he will make a statement on the matter. [21435/23]

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Richard Bruton

Question:

116. Deputy Richard Bruton asked the Minister for Finance how the projected surplus can be harnessed to strengthen Ireland's economic and social foundations. [21511/23]

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Written answers

Minister for Finance

I propose to take Questions Nos. 82, 101 and 116 together.

This year, a large budgetary surplus of €10 billion is projected and in the absence of any major shocks to the economy or our public finances, a large expansion of this surplus is projected for the years ahead. However, this headline position is flattered by the extraordinary rise in corporation tax receipts in recent years. My Department estimates that, almost half of corporation tax receipts this year will be windfall in nature – meaning that they cannot be explained by our economic fundamentals.

When I came into office as Minister for Finance, I asked officials in my Department to prepare a scoping paper outlining the merits of establishing a longer-term public savings vehicle to which these windfall receipts could be channelled and which would contribute to the long-term sustainability of our public finances. Such a vehicle could contribute to identifiable future costs, such as those relating to an ageing population, as well as less quantifiable spending pressures, such as the climate and digital transitions. The fund could also help contribute to meeting the cost of unforeseen shocks, such as those we have experienced in recent years.

The National Reserve Fund, which currently holds €6 billion, serves a useful purpose in making resources available to meet unforeseen events. However, I believe a more ambitious approach is needed to meet the fiscal challenges which lie ahead and my Department’s scoping paper explores options in this regard.

Taking this analysis into account, it is my intention to continue to develop the proposal to establish a longer-term savings vehicle, capitalised by windfall receipts, with a view to bringing proposals to Government providing for the establishment of this fund in due course.

Financial Services

Questions (83)

Neasa Hourigan

Question:

83. Deputy Neasa Hourigan asked the Minister for Finance if he will outline plans to address regulation of independent operators of ATMs, given that 75% of ATMs in Ireland are now owned by organisations that are not banks, are not regulated as regards service standards or fees and charges and for whom the Central Bank's conduct of business rules do not apply; and if he will make a statement on the matter. [21313/23]

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Written answers

Minister for Finance

I would like to thank the Deputy for her question which provides me with an opportunity to update on the progress being made by my Department in relation to the regulation of Independent ATM Deployers (IADs).

Firstly I want to provide some clarity on the statement that 75% of ATMs in Ireland are now owned by organisations that are not banks.

IADs currently control approximately 75% of ATM locations throughout Ireland. Bank branches, for example are considered a single location, however a bank branch may contain more than one ATM. If all retail bank ATMs were counted alongside all IAD-owned ATMs, recent data suggests overall IAD ownership of the ATM network may be in the region of 60%.

As Deputy Hourigan will be aware, in 2021 my predecessor as Minister for Finance, Paschal Donohoe T.D., instructed the Department to undertake a broad-ranging review of the retail banking sector.

The Review called on Department officials to prepare heads of a bill in 2023 to require ATM operators to be authorised and supervised by the Central Bank.

As well as this, the Review recommended that the Department provide the Central Bank with responsibility and powers to protect the resilience of the cash system including the authorisation and supervision of cash-in-transit firms in respect of their cash handling activities and related financial services. Finally, it recommended that the Department develop Access to Cash legislation and prepare heads of a bill in 2023.

I want to assure the Deputy that work is well underway by officials in my Department on this recommendation. It is intended that one piece of legislation will be drafted for all three recommendations on access to cash, including the aspects on IADs.

My officials are already working on Heads of Bill for this important piece of legislation and will bring the Heads to Government before the end of this year to seek approval to draft the Bill and to submit it for pre-legislative scrutiny to the Joint Oireachtas Committee on Finance, Public Expenditure and Reform and the Taoiseach.

In particular, in relation to IADs, the Department is closely working with the Central Bank of Ireland and the relevant industry players to determine the most appropriate means of authorising and supervising ATM operators. This will be a key element of the Access to Cash legislation.

Finally, the Deputy should be aware that while these developments are occurring at national level, there are also relevant developments underway at EU level. The European Commission is currently reviewing the revised Payment Services Directive, PSD2.

This review is expected to be published in June 2023. One aspect to be considered under the review is scope. At present, IADs are not included within the scope of PSD2. However, it is possible that this will be changed under future proposals for a PSD3. Officials in my Department will continue to monitor developments in this area.

Business Supports

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Written answers

Minister for Finance

I propose to take Questions Nos. 84, 91, 93, 99, 109 and 111 together.

The Temporary Business Energy Support Scheme (TBESS) was introduced to support qualifying businesses with increases in their electricity or natural gas costs arising from Russia’s invasion of Ukraine.

Sections 100 to 102 of the Finance Act 2022 make provision for the TBESS. The scheme provides support to qualifying businesses in respect of energy costs relating to the period from 1 September 2022 to 30 April 2023. The TBESS is available to eligible tax compliant businesses carrying on a trade or profession, the profits of which are chargeable to tax under Case I or Case II of Schedule D.

For claim periods falling between September 2022 and February 2023, qualifying businesses can claim for 40% of the increases in their energy bills when compared to their bills for the reference period which is the corresponding calendar month in the previous year. As part of enhancements to the scheme that are provided for in Finance Bill 2023 the level of relief increases from 40% of the uplift in energy cost to 50% from 1 March 2023, subject to the relevant monthly caps contained in the legislation. In addition Finance Bill 2023 reduces the entry threshold for the scheme from a 50% increase in average unit price to a 30% increase. The scheme will also be extended to 31 May 2023.

Businesses which are eligible for TBESS can register for the scheme via Revenue’s online service and comprehensive guidelines on the operation of the scheme are available on the Revenue website.

I am advised by Revenue of the following registrations and claims for the following counties as of 4 May 2023:

County	Registration Applications	Registrations Approved	Approved Claims	Value of Approved Claims	Value of Paid Claims
				€m	€m
Carlow	416	409	556	1.33	1.19
Cavan	636	628	783	1.74	1.62
Cork	3,664	3,620	4,870	9.39	8.79
Donegal	1,249	1,234	1,574	3.01	2.78
Dublin	6,329	6,188	8,988	24.86	22.92
Kerry	1,241	1,216	1,531	3.06	2.84
Kildare	1,041	1,024	1,423	3.33	3.11
Laois	412	407	562	1.03	0.95
Leitrim	254	248	291	0.38	0.33
Limerick	1,256	1,233	1,645	3.37	3.14
Longford	295	287	374	0.74	0.63
Louth	824	813	1,119	2.33	2.15
Meath	1,044	1,033	1,453	3.36	3.05
Monaghan	608	599	729	1.81	1.63
Offaly	449	444	561	0.96	0.91
Westmeath	643	634	890	1.64	1.45
Wicklow	710	697	953	1.88	1.65

Revenue further advised that as of 4 May, 28,495 businesses have registered for the scheme in total nationally. 23,852 of these have commenced the claim process. 18,217 businesses have fully completed the claims process and 5,635 have partially completed the claims process. Until the claims process is fully complete, the claim cannot be processed by Revenue, and for approved claims, a payment made. To date, the vast majority of completed claims have been approved by Revenue.

I am advised by Revenue that applications received from businesses are reviewed to determine eligibility and this accounts for the variance in the figures for ‘all applications’ and ‘approved registrations’. In addition, Revenue is publishing detailed statistical reports in relation to the TBESS which are updated on a weekly basis. These reports are available on Revenue’s website.

Consumer Prices

Questions (85)

Ged Nash

Question:

85. Deputy Ged Nash asked the Minister for Finance if he has read the recently published ECB paper entitled 'How tit-for-tat inflation can make everyone poorer'; if he is concerned at the evidence that profit-taking is contributing to price gouging and elevated levels of inflation; the action the Government plans to take in this regard; and if he will make a statement on the matter. [21440/23]

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Written answers

Minister for Finance

In Ireland, inflation stood at just over 8 per cent for 2022 as a whole, significantly higher than the ½ per cent average rate of inflation recorded for the previous decade. However, it is important to bear in mind that almost every advanced economy is in a similar position, with inflation in the euro area reaching an average of just under 8½ per cent last year.

At the root of this period of multi-decade high levels of inflation was a surge in global energy prices as a result of Russia’s invasion of Ukraine early last year. What started as an energy price spike has become increasingly broad based, with spillover price pressures from higher energy prices becoming evident in other sectors such as food (via higher fuel and fertiliser costs) other goods and services.

Due to varied pricing strategies it may take some time for wholesale price changes to be reflected in retail prices. Ultimately the setting of markets prices are a commercial matter and decisions around price setting are a matter for each individual commercial entity.

The Government is acutely aware of the impact of rising prices on households and has provided €12 billion in cost of living supports to date to those most in need. Many of these measures have been one-off or temporary in nature, ensuring timely and targeted support to the most vulnerable households without adding to inflationary pressures.

While inflation in Ireland remained elevated at 6.3 per cent in April, this marks a decline of over 3 percentage points from 9.4 per cent in October. These latest developments support the idea that inflation has now passed its peak and is on a downward trajectory. My Department recently forecast annual inflation of 4.9 per cent for this year compared to last, which is a significant downward revision on what was expected at the time of Budget 2023.

Despite this easing, the price level consumers face will remain elevated. Furthermore, ‘core’ inflation (excluding energy and unprocessed food) appears to be ‘sticker’ than initially assumed, and remained elevated at 5.3 per cent in April. As outlined in the ECB’s paper, wage and price spirals have the potential to drive ‘core’ inflation higher for longer. My Department closely monitors these trends and explicitly identified the emergence of a wage-price spiral as a risk to the outlook in the recent Stability Programme Update.

My Department will continue to closely monitor inflationary developments over the coming months, including the underlying drivers of inflation, and will ensure that the correct steps are taken to manage the ever-evolving situation.